Cuts in Medicare Payments to Physicians Expected in 2012: MGMA

October 24, 2011

How will Washington's budget-cutting zeal affect your practice next year?

Washington's current obsession with budget-cutting is likely to affect your practice in 2012, according to MGMA government affairs officers speaking Monday at the group's annual convention in Las Vegas.

What remains to be determined is precisely how deeply payments to physicians will be cut.
The debt-ceiling deal that Congress reached in August included a provision for a joint Congressional committee to identify at least $1.2 trillion in cuts by November 23, and for Congress to pass those cuts no later than December 23. Failure by the committee, which is meeting now in relative secrecy, to reach an agreement (or failure by Congress to pass the committee's recommendations) would trigger across-the-board spending reductions, including 2 percent cuts in payments to physicians. Yet it isn't clear whether that outcome would be better or worse for doctors than whatever the committee might agree to.

"There's no way to know until we see what the committee comes out with," said Allison Brown Brennan, senior advocacy advisor with the MGMA's Washington office, as part of a wide-ranging presentation on policy and procedural changes (both underway and under consideration) in Medicare and other federal programs that affect practices.

One thing MGMA is hoping the committee might do is recommend an end to the much-maligned sustainable growth rate formula (SGR) that is supposed to be the basis for Medicare payment rate-setting, but not in the starvation-diet fashion that Medicare's Payment Advisory Commission (MedPAC) recently proposed.

The SGR is designed to control Medicare spending growth to roughly the growth in the U.S. economy, but Medicare spending has exceeded the SGR threshold each year since its enactment in 1997.

When the threshold is exceeded in one year, Medicare payments are supposed to be reduced the next year, a correction that Congress inevitably forestalls, usually replacing the cut with a modest increase. The 2012 cut would have to be 29 percent to bring spending in line with the SGR. Recently, MedPAC recommended repealing the SGR by cutting Medicare payments 5.9 percent in each of the next three years, followed by a seven-year pay freeze.

And yet that prospect, draconian though it is, is perhaps less worrisome to the MGMA and other physician advocates than one provision of the healthcare reform law that will replace MedPAC with a board whose rate recommendations would take effect automatically unless Congress acts to overturn them.

"We're really concerned about that," Brennan said.

Some other notable health reform-related changes coming in the next few years: By 2014, Medicaid is supposed to reach payment parity with Medicare, and state-based health insurance exchanges are to be operational. More immediately, Medicare is moving ahead with its Shared Savings Program (under final rules released Thursday), which is supposed to provide impetus for the large networks of regional healthcare providers known as accountable care organizations. And it is altering some of the rules surrounding its new Annual Wellness Visit, which began this year, including a new "health-risk assessment tool" that physicians performing the exam will have to administer to each patient. The new tool will add a layer of complexity to the new wellness visits, which many practices are still struggling to understand. The wellness visits are in addition to Medicare's one-time-only "Welcome-to-Medicare" exam, which has existed for about five years.

"They're not proposing any payment adjustments [for the wellness exam] so you will get more work, but will be paid the same," Brennan noted.